So here's the main problem - Ministers (in the UK, but this is also a global problem) talk of wanting both free trade and regulatory sovereignty. And in the 21st century they conflict, and you have to trade-off between them. Which they don't want to say.
Developed countries, and increasingly others, have regulations on virtually all products and services. Absolute regulatory sovereignty - these have to be done our way or else - would massively reduce trade. And does in those countries which get close to this.
The alternative - no regulatory sovereignty, where you just accept the rules, products, services of others - puts you in the direction of the most free trade. But as you see with countries trying to do US free trade deals - just accepting US food rules isn't too popular.
By far the most positive statement to date on UK-EU talks. We're still talking, deal possible in September, both sides starting to show a bit of room for compromise. But time is short and many differences remain. As we know. Even so, cautious grounds for optimism.
Watching this thread develop, the biggest problem remains conceptual for the UK government. You can't do modern trade deals without accepting restrictions on your law making abilities. As is also being shown in US talks. Big mistake to claim otherwise.
Whether its the US wanting to ensure access to UK markets for their farmers, or the EU wanting to stop preferential access if the UK is deemed to be undercutting (and by the way this tells us a lot about EU and US approaches to trade) larger partners expect concessions in deals.
Little known fact - both the EU and US have signed trade related deals with China this year.
The US-China deal of January mostly on purchasing agricultural goods. Now the EU-China deal on Geographical Indications.
One could look at this and suggest that the EU-US rivalry on agriculture trade is more important to them than the dangers of China.
The relationship between foreign policy and trade is not entirely straightforward, but let's just say other countries will not be shy of separating them, even if the UK decides otherwise, that we should avoid greater trade and investment with China.
I'm in the rare position of being able to add to a Peter Foster Brexit thread. A big reason the UK can't reach a decision on technical standards and conformity assessment is that these are the subject of asks from the EU AND US. A problem of negotiating both at the same time.
At the moment the UK follows the EU system where a Europe-wide voluntary standard is frequently a way to demonstrate conformity. They'd like us to stick with that system, and we don't completely want to lose the access it gives, but...
The US would like us to abandon the EU system and allow their voluntary standards to be defined as international, which threatens our ability to keep minimise technical barriers with the EU. And that's a top US ask behind only agriculture.
This proposed amendment to the Trade Bill to give Parliament a say on new agreements is widely supported by UK business, civil society, and MPs from across parties, and would help put UK trade policy on a more sustainable cross-party footing. I hope it passes but fear it won't
In the UK Trade Policy Readiness Assessment I suggest lack of broad consensus as currently the biggest issue in taking forward our trade policy and accompanying agreements. Government could start putting that right by allowing Parliament a proper say -
Parliament will ultimately have to be given a say in UK trade policy, trade agreements are too controversial and wide-ranging in content to be left to prerogative powers. Would be best for government to recognise this rather than continue to argue for the indefensible.
The published UK border processes post-January put in mind one of the sillier Brexit reports which claimed WTO customs procedures were less onerous than those within the EU. Possibly also the efforts of the 1980s conservative government to remove such barriers.
Worth recalling this is just goods procedures at the border. Then there are the extra regulatory processes to go through. For services all manner of extra issues starting with rights to work in the EU.
Time to talk UK China economic relations. Lots being written, but stark realities remain - like knowing what we want to achieve, and if that is China following the rules then there's going to need to wide consensus on what they are... (thread) 1/ ft.com/content/4fe3a6…
Let's start with some numbers - China is our 5th largest individual country trading partner, our 3rd largest goods export market, 2nd largest goods import market, though only 14th for services exports. Important then. 2/
Then there's investment. A good article yesterday in the Sunday Times on Chinese investment in the UK. But there's also substantial UK investment in China (for example this story from 2018 china-briefing.com/news/brexit-br…) 3/
Very important report from @UKandEU today on manufacturing and Brexit. Goods exports to EU and closely related countries (e.g. Turkey, Switzerland, Norway) is 52% of our total. No trade-deal will mean tariffs and extra regulatory costs - ukandeu.ac.uk/wp-content/upl…
The lengthy regulatory alignment section shows the additional costs the UK will face from the government's demands for 'independence' in this area - additional costs in automotive, aerospace, pharma, chemicals which will render some production uneconomic (see example below)
Can new trade deals make up for lost manufacturing sales to the EU? Unlikely. It isn't likely to be economic in many cases to just make in the UK for global and UK sales. We're already losing Honda, who exported many cars to the US.
A little Monday morning tale - how the US and EU have been engaged in a low level trade conflict for many years, and how the UK government is being urged to join the US side in *intensifying* this. And needless to say, why we shouldn't get involved... 1/
That US-EU trade conflict - for many years both sides have been complaining about the other. For example as well known the US believes the EU is unfairly blocking market access for their beef, chicken, pork etc among others - see ustr.gov/sites/default/… for this and more 2/
We hear less from the EU on grievances about accessing the US market, but there are plenty, some equally long lasting. Many are listed in their Market Access database, others relate to how US regulatory systems work (or don't, often) madb.europa.eu/madb//barriers… 3/
Back to first principles. Trade deals take years because they commit policies across a whole range of complex areas where policy making takes time. Deciding all such policies in a few months in order to commit it in treaty with your main trading partner is not good government.
Among the policies we need to decide in the coming weeks for trade deals - state aid, public procurement, animal welfare, food safety, environmental protection, labour, agriculture imports, immigration / work visas, goods regulations, standards, conformity assessment...
But we just want a simple trade agreement with zero tariffs...? In the 19th century perhaps. In the 21st century trade partners want to make sure those tariff cuts are meaningful, and that means ensuring competition is fair both ways.
A government that has made a mess of reopening schools has now decided to oppose the single most impressive celebrity of recent weeks in denying free school meals over the holiday season. Genuinely baffling on both counts.
A government more interested in culture war and Brexit purity than actually delivering? So far Starmer has been rather cautious of overdoing the criticism, but wondering if that might change. ft.com/content/06ffc5…
How much of the debate on lockdowns has been generated by those in the media and politics who can (like me) easily work from home in a comfortable setting (or for some, drive to another home)? Rashford's intervention forces the conversation to others, good
Seeing a few articles like this, the supposed battle in the Conservative Party between free marketeers and protectionists, and sorry but it doesn't work. Because to equate a US trade deal, with an America first President, as free trade, just isn't true theguardian.com/commentisfree/…
Real free traders wouldn't support putting up extensive trade barriers to 50% of their trade. A US that believed in free trade would actually offer trade liberalisation in procurement, services, or regulatory approvals, none of which are likely to be on offer.
Supporting a US free trade deal is not choosing free trade or protectionism. Similarly supporting UK farmers. It is to choose between the US and EU approaches to regulation. Neither of which are classic free trade as classic free trade doesn't exist in the modern regulated world.
When we're thinking about the UK economy and trade we rarely acknowledge that 70-80% of trade in services and goods is part of global chains (sources OECD, UNCTAD). Time to think a bit more about that... 1/ oecd.org/trade/topics/g…
Large UK sectors most obviously part of global supply chains - automotive, aerospace, engineering, pharmaceuticals, legal, professional, financial services, retail. More mixed picture in food and drink, education, tourism, ICT... 2/
What do those global supply chains need? Ability to be able to move people and goods easily. Obviously the first is a global problem right now, but longer term the UK has policies to increase barriers to both - in goods through customs checks and diverging regulations 3/
Japan's response to the Brexit vote was bafflement at best, but I also heard the word 'betrayal' used. It is worth returning to September 2016 when the Japanese government issued this highly unusual 15 page statement. 2/ mofa.go.jp/files/00018546…
Japanese companies have been major investors in the UK, Nissan the most obvious example. A stable business environment and access to the EU were the primary reasons. For Japanese trade a UK-EU deal is the most important priority. 3/ uk.reuters.com/article/uk-bri…
My favourite Brexit / trade niche - those in the UK who claim 6 months is easily sufficient to do a significant trade deal notwithstanding no other country having managed this before.
Cos we know better than the US, China, Japan, EU etc... and it isn't just Brexit supporters.
Does it never occur to those saying how easy it is to do a quick trade deal that we might lose out from doing so? That other countries took more time because they were taking more care to get what they needed?
Rhetorical questions. It clearly hasn't.
What could be so difficult about just reducing tariffs? Well, the rules of origin to qualify for the reductions, making sure the proof doesn't cost more than the tariff, making sure our products are actually allowed in without extra costs etc etc.
Organising concessions in a zero trust environment is a big problem. You might be able to see where they should come, but both sides will fear if they give ground without the other doing so they've lost a round. This takes a lot of time in normal talks.
Interesting that this week the UK government is believed to have agreed to accede to the big US demand in trade talks, accepting their food, despite public promises otherwise, but will not accede to EU demands to accept restrictions on environment or state aid policy.
Northern Ireland business call for extra time to be ready for the changes coming to trade under the protocol.
I don't see any sign the UK government ministers are aware of the magnitude of changes to trade coming in January - too used to a single market. ft.com/content/aedc4a…
Just 'border checks' tends to understate that goods could easily be stuck and people not have the right approvals to proceed. Just ask countries from outside the single market who send goods to the EU...
Also worth remembering no-deal with the EU would mean no deal also with Turkey, and at best limited deals with Switzerland, Norway and Iceland. That's over 50% of UK trade and over 50% of UK manufacturing exports subject to increased trade barriers.